FEDERAL Treasury has conceded it has consistently inaccurately forecast government revenue by an average of $8 billion a year for the past two decades.

It has recommended it look for ways to improve the way it forecasts the corporate tax take, a large component of the federal government's overall revenue.

Treasury's review of forecasting, the results of which were published on Friday, was intended to provide an up-to-date ''health check'' of Treasury's economic and revenue forecasting performance in recent years.

The last time such a review occurred was in 2005.

Advertisement

The admission by Treasury comes after the government in December said it no longer expected to reach a budget surplus in excess of $1 billion this year, despite promising to do so.

But the shadow treasurer, Joe Hockey, said on Friday that the government should not use Treasury as a shield to cover for its own economic mismanagement.

"It is commendable that Treasury acknowledged that its processes needed review and has moved to correct these deficiencies," Mr Hockey said.

"However, at the end of the day the estimates produced in the Budget papers and MYEFO are the government's own numbers."

The Treasurer, Wayne Swan, said on Friday that it had become harder to forecast economic conditions since the global financial crisis, and that this had made it harder to predict government revenue.

"While the GFC was the catalyst for ripping $160 billion in revenues out of our budget, we didn't anticipate the full impact of global volatility and broader revenue changes on our revenue base or how long they would last."

The review found Treasury had performed well compared to its international peers in recent years, but that it had tended to underestimate growth during economic booms and overestimate growth during periods of downturns. "A major contributor to the errors in the taxation revenue forecasts are the errors in the macroeconomic forecasts," the review said.

"However, there are additional sources of error that reflect tax-specific factors, such as the timing of the receipt of revenue. As a consequence, the taxation revenue errors are generally larger than the macroeconomic errors," it said.

It also recommends Treasury look for better ways to understand the relationship between nominal and real gross domestic product.

But economists said the average margin of error of $8 billion was not significant.

Saul Eslake, chief economist for Bank of America Merrill Lynch, said: "In this year, for example, it could have represented the difference between achieving a surplus or not.

''In the last few years when the budget deficit has been upwards of $40 billion, in the grand scheme of things it probably hasn't mattered as much. But certainly this year it's a fairly significant error relative to what the government was aiming at."

Mr Hockey said Mr Swan should reveal what influence he has had on the published forecasts of key budget indicators. "The government should not use Treasury as a shield to cover for its own economic and fiscal mismanagement," he said.

Hodson's daughter: Witness protection not safe

"I feel sorry for anyone coming into witness protection," says the tearful daughter of police informer Terence Hodson after the State Coroner delivered an open finding into his murder and that of his wife Christine in 2004.